Boca Raton Attorney William J. Reilly Indicted For Securities Fraud

On October 24, 2012, Boca Raton securities lawyer William J. Reilly was arrested by the FBI for allegedly engaging in a scheme to fraudulently sell stock in a company called Caribbean Pacific Marketing. In its S-1 registration statement filed with the Securities and Exchange Commission (“SEC”), Caribbean Pacific claimed it qualified as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”). Once the S-1 was deemed effective by the SEC in August 2012, Reilly sold stock to, among others, a “confidential source” who was working with the FBI.

According to the SEC, Reilly had prepared the company’s registration statement and its accompanying prospectus. The SEC and the U.S. Attorney’s Office consider both to be false and misleading, in part because they failed to disclose that Reilly himself was a control shareholder who had been sanctioned by the SEC and disbarred from the practice of law in the state of New York.

A few days later, the SEC announced that it was investigating whether it should suspend the effectiveness of Caribbean Pacific’s registration statement, thereby putting a stop to any further stock sales. The suspension became official on December 3.

Reilly had been involved with securities fraud since at least 2006, according to the SEC. In 2009, he was sued by the SEC for writing fraudulent opinion letters for certain shareholders of Forest Resources Management Corp. for allegedly authoring letters that enabled shareholders to free up restricted stock so they could sell it immediately. According to the complaint, Reilly was also a corporate officer of Forest; he sold the shell to a group of promoters, for whom he wrote the opinion letters in question. For his role in the scheme, he was ordered to pay disgorgement and fines, received a penny stock bar, and was also suspended from practicing before the SEC for five years.

According to the SEC, he ignored the suspension order and in 2011 he wrote at least one legal opinion that was filed with the SEC. In January 2013 he was permanently barred from practicing before the SEC.